With much hope placed on bank results, even if yesterday’s Morgan Stanley announcement of a cut in IB bonuses hinted not all may be well, moments ago Bank of America said Q4 profit rose 43% as revenue rose less than expected, however offset by rising cost-cuts. Q4 EPS of $0.40, beat expectations of $0.38 despite missing on the top line, reporting revenues of $20.22bn, below consensus of $20.89bn, as trading revenues missed dragged lower by FICC revenue of $1.96bn which missed estimates of $2.12bn. In an attempt to redirect attention from the mixed earnings, the bank also announced it would boost its buyback by $2.5BN from $1.8BN to $4.3BN.

Net interest income rose 6.3% to $10.3 billion, falling short of the $10.6 billion average estimate. Net interest margin was unchanged from three months earlier at 2.23 percent. Investment-banking revenue, which includes dealmaking and underwriting securities in the business run by Christian Meissner, slid 3.9 percent to $1.22 billion, the company said. Last month, Moynihan said he expected those activities would generate $1 billion to $1.2 billion in the fourth quarter. Mortgage revenue almost doubled to $519 million from a year earlier, the bank said. Barclays Plc’s Jason Goldberg had expected the bank to generate $252 million from mortgage banking as fewer consumers take out residential loans, while Macquarie Group Ltd.’s David Konrad estimated $218 million.

While FICC revenue climbed 12% to $1.96 billion, it was short of consensus estimates of $2.1 billion. Equity trading rose 11 percent to $948 million, in line with their predictions. Total revenue rose 2.1% to $20 billion, missing estimates of $20.8 billion. Expenses fell 6% , more than expected, to $13.2 billion as compensation costs dropped 2.6% .

The summary of Q4 results is shown in the table below.

According to CEO Brian Moynihan, BofA is “lending more and seeing historically low charge-offs”; with revenue up “modestly,” but EPS grew as BAC continued to manage expenses, create operating leverage. In fact, as it nots in its slideshows, personnel and non-personnel costs declined 3% and 10%, respectively, from 4Q15. That said, the bank also took half a billion out of LT debt costs, while increasing service charges.

CEO Brian Moynihan has been cutting costs for years while contending with persistently low interest rates. The bank last year set a target of $53 billion in annual expenses by the end of 2018, or about 8 percent less than 2015.

Why the modest disappointment? According to CFO Paul Donofrio, the “strong” client activity, good expense discipline created “solid” operating leverage in quarter, however the recent rise in interest rates “came too late” to impact 4Q results. Still, BofA expects a “significant ” increase in net interest income in 1Q. It remains to be seen if it gets it.

The bank also revised earnings for recent years on Oct. 4 to reflect a change in the way it accounts for certain securities held in its investment portfolio. The move brings it in line with other Wall Street firms and may reduce swings in quarterly earnings, the bank said. The lender also dissolved a business segment created in 2011 to house delinquent mortgages.

More troubling, the Bank reported misses in key trading metrics, with Q4 trading revenue ex-DVA of $2.91 billion, missing estimates of $3.06 billion, as Q4 FICC revenue (ex-DVA) came in at $1.96bn, also missing estimates of $2.12Bn. This was modestly offset by a small beat in equities trading which in Q4 printed at $948MM, above the $944MM expected.

Looking at the core business, BofA announced that average total loans in the quarter rose by $7 billion, or 3% Y/Y, to $908 billion, as average total deposits rose by nearly double that amount, or 5% Y/Y to $1,251 billion, up from $1,2227 billion in Q3.Total client balances were up 10% to $1.0t. Total mortgage production up 29% q/q to $21.9b. New U.S. card accounts 1.13m vs 1.32m q/q. 21.6 million mobile banking active users, up 16%; 19% of deposit transactions completed via mobile devices

Anyone looking for a big rebound in the bank’s net interest income will have to wait: in Q4 NIM printed at $10.3 billion ($10.5 billion FTE), which “reflected the benefits from higher interest rates as well as loan and deposit growth, partially offset by $0.2B in market-related debt hedge ineffectiveness.” However, for all the talk of a steeper yield curve, BofA’s net interest yield remained flat at 2.23%.

As the chart below shows, the market has been pricing in significant action from NIM, although with 2s30s going nowhere, bank stocks in general, and BofA in particular, appear to be overpriced based solely on this metric.

That said, BofA was optimistic about the future and said it expects NII to “increase approximately $0.6B in 1Q17, assuming rates remain at current levels and modest growth in loans and deposits.” The bank also remains “positioned for NII to benefit as rates move higher” noting it expects a “+100bps parallel shift in interest rate yield curve is estimated to benefit NII by $3.4B over the next 12 months, with nearly 75% of the benefit driven by short-end rates.” Meanwhile, it was unclear what the MTM loss on securities held for sale was, and will be, as a result of such a steep move in yields.

Perhaps the most notable aspect of BofA’s earnings was the continued decline in overhead, as total noninterest expense of $13.2B declined $0.8B, or 6%, from 4Q15, driven by broad-based reductions in operating and support costs, lower litigation expense and improvements in mortgage servicing costs. The bank adds that personnel and non-personnel costs declined 3% and 10%, respectively, from 4Q15

FTE headcount down 2% from 4Q15 as reductions in support and operations more than offset increases in sales staff.